December 26, 2013

As China gets ready to celebrate Mao’s 120th birthday there have recently appeared a slew of articles on China’s current relationship with the Great Helmsman. One of the most interesting was in the Global Times, warning about “Mao denigration,” a campaign to malign Mao, initiated mainly by Westerners who hate China.

That Mao is a great man has a strong foundation in Chinese society. Some think Mao has had an infamous reputation in society. This is only a naïve delusion of these people….

There is no historical or current evidence that is convincing enough to denigrate Mao. Voices that completely deny or support him are both highly polarized. Currently, the demonizing voices are mainly from the West, which also criticizes China’s socialist system.

The article disingenuously dances around the dreadful things Mao did by noting “his personal leadership style has its own limits,” and not unsurprisingly bestows on him the usual cliches — he brought China independence, he set the stage for China’s current prosperity, people’s lives improved under Mao, and there is, needless to say, no references to Mao’s experiments like the Great Leap Forward and the Cultural Revolution. It even claims Mao’s revolution “put it [China] on the right track of human rights development.”

Human rights development? Mao did have some solid achievements, but I don’t see “human rights development” among them. He did help give China a backbone as it freed itself from foreign domination. He did help give women greater equality. But as in any discussion of Mao’s achievements, the question needs to be raised, “Yes, but at what cost?” China is still reeling from the effects of his pet projects that caused the death of millions, and that forced generations of Chinese to eat a lot of bitterness.

But that’s okay; you can’t make an omelet without breaking a few eggs, and as the GT article concedes, “A revolution always has its cruel side, as did the Chinese revolution led by Mao.” That cruelty doesn’t really matter much, it says; what matter is the result of the revolution. It’s funny, but my own reading on the story of the revolution is that the result of the revolution up until the time Mao died was total chaos and misery, until Deng stepped in and cleaned up the colossal mess Mao had made of the country.

But the Global Times article accurately reflects, to a large extent, what a lot of ordinary people in China believe about Mao, that he made life better, that the Mao years were relatively corruption-free — many of the laobaixing will even go so far as to say they wish Mao were in power today. This article in the SCMP examines this phenomenon.

Today, reverence for the late leader is on the rise. President Xi Jinping often pays tributes to Mao and looks to him for inspiration to manage the country. Ordinary people, especially from the bottom social strata who have not benefited from the country’s economic boom, miss his reign and some even set up shrines at home to worship him. Statues of the great leader continue to be erected across the country with fanfare.

“If there is one man, one vote now, the leftists would get most of the votes,” says Du Daozheng , the 90-year-old publisher of liberal political magazine Yanhuang Chunqiu and once a loyal Mao follower….

Xi launched “rectification” and “mass line” campaigns to fight corruption and restore grass-roots support. He also revived the tradition of “self-criticism” sessions in which cadres pillory each other’s failings.

Liang Zhu, an expert on Mao Zedong Thought and former deputy head of Peking University, has argued party officials were showing a “a correct proletarian view of power” by returning to Mao. “Mao insisted that ‘to serve the people’ is the basic mission,” he wrote in a recent essay.

I have to wonder how Mao’s blood-stained hands and cutting China off from the outside world served the people, but I also have to acknowledge that most Chinese people believe that Mao was good for their country. And I understand, the last thing they want to hear is Westerners criticizing Mao. But China’s refusal to acknowledge the very dark side of Mao’s tragic policies is a cause of constant fascination among China watchers and will continue to spawn op-eds and articles examining how this could be so.

The Washington Post also writes today about the current Mao fever that’s taken hold of China.

Mao is everywhere, even after death.

In addition to that unavoidable portrait overlooking Tiananmen Square, he appears on most of China’s bank notes, is invoked countless times a day in party speeches and remains a staple of state-sponsored TV dramas and movies. This month, however, the Mao industry shifted into overdrive, with restaurants flogging his favorite dishes, cities plastering his sayings on walls and a plethora of statues making their debut — the most notable (ahem, gaudy) of which has been a $16.5 million gold version inlaid with gems….

Mao’s home town of Shaoshan has spent $320 million in preparation — renovating historical sites and museums, organizing galas, and building new roads and other infrastructure. Hundreds of thousands of people are expected to pass through. Many hotels have been fully booked for days leading up to the anniversary. Merchants in town say they have stocked up on Mao tchotchkes of every kind — busts and statues, key rings, commemorative liquor, little red books of his sayings and photos from every phase of his life.

A $16.5 million golden statue of Mao studded with gems. $320 million to get his home town ready. No, I’ll never stop marveling at the Mao phenomenon.

I’m reading a book of essays (book review to hopefully follow soon) about a man whose grandparents and their siblings were exterminated for having been “landlords,” and whose parents were turned on in the Cultural Revolution, and again I wonder, how much suffering can the Chinese people endure, and how can they forgive the man who directly caused so much of the torment? Intellectually I understand it, China’s thirsting for a great leader, and all the propagandizing that’s elevated Mao to the status of a god. But it never ceases to amaze me how short our memory spans can be, and how willing the Chinese people have been to forget the nightmare years and to keep Mao’s personality cult thriving.

The Washington Post article cited above, which is an excellent read, quotes from a vitriolic opinion piece published outside of China that criticizes Mao and his myth; the author, a former aide to Zhao Ziyang, lives under house arrest and had his article smuggled out of China. Referring to the deaths of millions under Mao, the writer, Bao Tong, tells the reporter, “China cannot turn a blind eye to these facts.” But it has been doing a marvelous job doing exactly that for well over 30 years.

December 3, 2013

For whatever reason, the fenqing remain virulently adherent to the notion “If you criticize the CCP, you hate China.” This is one of those slam-your-head-against-the-wall arguments that never goes anywhere. “If you hate China so much why don’t you go back to America,” I was scolded many times when I lived in Beijing and had the temerity to point out stories of government excess or corruption or malfeasance or repression. Never mind that I also blogged often about how much I loved the Chinese people and treasured my experience living there, maybe my favorite place on earth. All my friends know I love China. but once you question the government, once you raise questions about the poor being thrown out of their homes or bloggers thrown in prison or rampant censorship you become an enemy of the people and a hater of the entire nation.

He gives a vivid example of an enraged official who vents his spleen at Chinese Internet users protesting the murder of a watermelon vendor at the hands of local officials in Hunan province. He also is enraged that the angry Weibo users aren’t focusing their rage at the US instead and shrieks, “These unpatriotic people are degenerates — the dregs of society!”

“These people so love to bad-mouth their native country, but then they hang around here instead of going off to America!…Off you go, hurry up! I’m all for it. But before you leave, be sure to get some plastic surgery done — you don’t want them to see you’re a Chinese! … These people hate their country so much they feel miserable that they’re Chinese, so let’s pack them off to America — the sooner the better! Such riffraff!”

All for protesting a murderous act by government officials.

For me, the high point of the column is where he relates a post that he himself put on Weibo:

Some people still aren’t clear about the difference between nation and government. And so anyone who aims a criticism at the government gets denounced as a traitor. Let me make an analogy: The nation is like one’s parents, and the government is like a steward; loving the steward and loving one’s parents are completely different things. One can’t change one’s parents, but one has every right to replace the steward.

Obviously a lot of young Chinese people have gotten this message. There was a backlash on the Chinese Internet against the official’s nationalistic hysteria, so much to the point that he was forced to tone it down. But there is another group, what we call the fenqing — young, usually male and totally unable to see the distinction between patriotism and nationalism — who can’t be reasoned with, and who actually become enraged at the very suggestion that there is such a distinction.

There is much more to this story than I can relate in a single blog post, and it is truly required reading. A pity those who need to read it most probably won’t, or will dismiss it as treason. After all, if he feels so strongly, why doesn’t he move to America? As I said, you might as well slam your head against a wall.

November 13, 2013

I was struck to see on the same day two articles in two publications each covering the progress (or lack thereof) of two Chinese cities both undergoing massive urbanization projects. What was striking was the huge difference between the two cities’ approaches. One article appears in the NY Times and covers the sad fate of migrant workers being all but forced to move into the township of Huaming located on the outskirts of Tianjin. The second, in the Wall Street Journal, tells a far more optimistic and upbeat story about how urbanization seems to be working in the city of Tongling in Anhui province.

Urbanization, of course, is one of the crown jewels in China’s plan to stimulate the economy and help relieve rural poverty, moving more and more farmers off their farms into cities where they can, ideally, find better jobs and hopefully begin their entrance into China’s middle class, thus helping spur domestic consumption. Easier said than done.

The Times’ story is nothing less than tragic. While Huaming at first glance appears attractive with rows of apartment houses and tree-lined streets and public schools, the story behind the scene is dire. Shoddy construction makes living in these apartments a grueling experience, and promises to retrain the new inhabitants, fresh from their farms, so they can find work have all been broken. These farmers were offered extravagant promises by the government of a transformed life with new jobs and housing and opportunity, but the article’s author, the great China Hand Ian Johnson, writes:

Today, Huaming may be an example of another transformation: the ghettoization of China’s new towns.

Signs of social dysfunction abound. Young people, who while away their days in Internet cafes or pool halls, say that only a small fraction of them have jobs. The elderly are forced to take menial work to make ends meet. Neighborhood and family structures have been damaged.

Most worrying are the suicides, which local residents say have become an all-too-familiar sign of despair….

But the new homes have cracked walls, leaking windows and elevators with rusted out floors. For farmers who were asked to surrender their ancestral lands for an apartment, the deterioration adds to a sense of having been cheated.

“That was their land,” said Wei Ying, a 35-year-old unemployed woman whose parents live in a poorly built unit. “You have to understand how they feel in their heart.”

The sense of despair and alienation surfaces in the suicides, a late-night leap from a balcony, drinking of pesticide or lying down on railroad tracks.

The plan is for hundreds of millions of China’s rural poor across the country to be moved into cities like Huaming. But is China really prepared to take this leap, and can they possibly succeed in giving these farmers a better life? The answer seems to be a resounding no — at least in certain instances.

But then there is the WSJ’s stunningly different story about Tongling in Anhui Province. The farmers, importantly, are still allowed to keep their land, and in every way it sounds like the local government is making the shift from rural to urban as smooth as possible for the new arrivals. There is, however, one huge difference: Tongling is a copper mining town and constantly needs new workers.

So it is doing what many places in China are unwilling to do. It is inviting migrants and their families to settle, giving them the same rights to education, health care and housing as locals, and even letting émigrés from China’s villages retain their exemption from China’s notorious one-child policy, so they can have a second child.

he approach shows signs of working. Tongling’s population is growing, while overall Anhui province’s is falling, and the local economy is getting a small boost. “Farmers are leaving their land and coming to work in the city’s factories,” says Chen Lei, a manager at the Tongling subsidiary of Hailiang Group, which makes copper tubes and plans to more than double its workforce of 280 in the next three years. “We’re seeing that now.”

This enlightened approach even includes reforming the hukou system so the once-rural residents receive the benefits of an urban hukou, including free education, public housing and health insurance. Everything in this article is positive. It is proof that under certain circumstances China’s monumental effort to urbanize its rural poor can work. But the story of Tongling is the exact opposite of what is happening in Huaming, its thirst for urban factory workers making what seems to be all the difference.

Reading the story of Huaming it sounds like it is already a lost cause. Can China learn from tragedies like this, while also learning a lesson from what’s happening in Tongling? I understand there is a bit of apples and oranges to this comparison; Tongling can actually offer the new arrivals a future. Without such an offer, the mass movements into the cities are most likely doomed to fail. If urbanization is going to work there absolutely must be jobs available or these new cities will indeed become ghettos of hopelessness, broken promises and shattered dreams. You can’t just take their land away and leave them to rot in crowded apartments that are falling apart.

October 22, 2013

This photo taken yesterday in Harbin is all over the Internet, but I couldn’t let it go without posting it. As the article explains, the air darkened and filled with smoke after the city turned on its coal-powered central heating system.

“School was canceled, traffic was nearly paralyzed and the airport was shut down in the northeast Chinese city of Harbin on Monday as off-the-charts pollution dropped visibility to less than 10 meters in parts of the provincial capital.”

Nothing poses a more serious problem to China than its poisoned air and water. It could choke off the country, driving away tourism and casting a dark shadow over its “economic miracle.” A shame. I have been dying recently to get back, then I hear stories from hell from my friends who are still there, and I see pictures like these, and I wonder if I really want to go. A “lifer” I know who was going to live in China until his dying day is now looking for a home in the West for fear his children will be harmed by Beijing’s toxic air.

So many Chinese people have told me that the government, for all its faults, could achieve anything it wanted to once it had its sights on the target. But I don’t think they can solve this problem. There are two options: choke on pollution, or drastically slow down growth. China’s in a box, and really has no choice: the growth must go on if the CCP is to hold onto power. Breathable air takes a back seat. I know, they’re investing heavily in green energy, but that will take years to implement. China runs on coal, and will do so for decades to come. A tragedy.

October 10, 2013

There are times when I almost wish the US was being led by an authoritarian government like China’s so it could get things done with no nonsense or political bravado. I say I “almost” wish that because, of course, there is enough bad that comes with authoritarianism to make democracy, for all its wretched faults, the best way to govern. But still, at the moment the notion of having the CCP run things is tempting.

We are now in the middle of the most shocking game of chicken we’ve ever seen in this country’s history. It is utterly unprecedented and frightening. The very idea that the US might default on its debts should scare everyone shitless. The fact that the Republicans needlessly forced the government to shut down ten days ago tells us this is no ordinary inter-party feud. The far right of the Republican party poses an existential threat to our democracy itself.

How does one party that has lost two presidential elections and a Supreme Court case – as well as two Senate elections – think it has the right to shut down the entire government and destroy the full faith and credit of the United States Treasury to get its way on universal healthcare now? I see no quid pro quo even. Just pure blackmail, resting on understandable and predictable public concern whenever a major reform is enacted. But what has to be resisted is any idea that this is government or politics as usual. It is an attack on the governance and the constitutional order of the United States.

When ideologies become as calcified, as cocooned and as extremist as those galvanizing the GOP, the American system of government cannot work. But I fear this nullification of the last two elections is a deliberate attempt to ensure that the American system of government as we have known it cannot work. It cannot, must not work, in the mindset of these radicals, because they simply do not accept the legitimacy of a President and Congress of the opposing party. The GOP does not regard the president as merely wrong – but as illegitimate. Not misguided – illegitimate.

Underneath it all run the venomous tendrils of racism. I saw on the news just yesterday an interview with one of the most radical GOP congressmen and he said we still didn’t know if Obama is American or Kenyan. From day one the far right has challenged Obama’s legitimacy in a shameful spectacle of outrageous accusations. He is different; he is not like you and me. He is not a real American. Everything he does must be challenged and overturned at any cost. Any cost. Right now, I’m embarrassed to be an American. I wish we could bring in the CCP for a few days to crack down on the radicals, then send them on their way once the debt ceiling is raised and the country has no fear of default.

I’ve never worried about the future of the US like I’m worrying now. I think ultimately there will be a bargain, and the Republicans will back down about defunding the Affordable Care Act, a totally lost cause, a stupid cause. But that they dare take the country right to the brink of default, threatening the stability of the entire world, tells us just how dangerous these people are. And we’re stuck with them. Thanks to gerrymandering, the far-right loons are almost guaranteed reelection, and we may go through this nightmare again and again. This isn’t democracy, it’s a perversion of democracy, a shameless attempt to delegitimize the elected president and impose the agenda of the right, one that the American public rejected in the last election. The Tea Party is the greatest blight on the history of America since the end of Jim Crow. Let’s hope they sicken enough Americans for them to lose control of the House in 2014. It’s a long shot, but it’s the best, maybe the only hope America has.

September 13, 2013

There is a narrative about the halcyon period in China from when Mao assumed power in 1949 through late 1956 when he launched what turned out to be the insidious “Let 100 flowers bloom” campaign. These were the good years when women were liberated and the nation’s new leaders seemed reform-minded and effective. The bad stuff all came later.

The genius of communist violence was to implicate ever more people in it. After landlords were tried in front of village tribunals, then beaten and shot, land and possessions were divided up among the crowd. It was an incentive to find new victims, many of whom were burned or buried alive. But the more victims, the greater the fear of reprisals from distraught families. So the tribunals kept on killing. Children were not spared. By the end of 1952 up to 2m Chinese had been murdered.

A parallel terror was waged against those deemed to be counter-revolutionaries, Nationalists or foreign spies, some as young as eight, with new victims trucked daily to execution sites. Throughout these orgies of violence, Mao and other leaders coolly laid down quotas—up to four deaths for every thousand Chinese was considered appropriate. In the three provinces under the jurisdiction of Deng Xiaoping, known today for having been open-minded, 150,000 had been executed by November 1951. The total number of deaths will never be known. But in late 1952 Bo Yibo (father of Bo Xilai, whose recent trial has caused a sensation) said, approvingly, that 2m had been executed.

Not everyone could be killed, Mao acknowledged. So a vast gulag was born, swallowing up counter-revolutionaries, vagabonds, prostitutes, capitalists, marketeers, foreigners and, later, intellectuals. The population in the “reform through labour” camps quickly reached about 2m. The relentless indoctrination, one inmate later said, was nothing less than the “physical and mental liquidation of oneself”.

The country was, as Mr Dikotter puts it, well down “the road to serfdom”—literally so for farmers. All the landlord blood spilled was supposed to empower peasants. But the upheaval had devastated the countryside. Draught animals, fertiliser and skills were in short supply. The markets and other networks on which farmers had long depended were destroyed. Farming risked being branded the work of the evil landlord, yet the state demanded ever more grain from farmers in tax. Hardships multiplied. Villagers sold their children.

I realize that Chinese people don’t like to hear foreigners say negative things about Mao. It’s a topic of great sensitivity, as I myself learned the hard way when I tried to discuss it with a co-worker some years ago. But the story needs to be told anyway. They aren’t going to read about it in Chinese textbooks so I am grateful to scholars like Dikotter for making sure that anyone interested can learn the truth. Again, since I haven’t read the book I can’t say it’s all gospel truth. But based on the review, it sounds like a good and important read. I admit, I’ve been sucked into the “halcyon years” myth myself. It’s good to see it debunked.

I’ve never met an expat in China who didn’t have his or her own extraordinary stories to tell, stories that at times made them stop and ask themselves, “What exactly am I doing here?” Every day one can experience an “only in China” moment, like waiting three hours to see a bank teller or seeing teenagers sleeping and snoring at an Internet cafe. I’ve described many such situations on this blog, like my being harassed for being a “laowai” in Kunming, or my delightfully nauseating experience at a Beijing duck restaurant, or my experience watching a beggar on a bus.

Having lived in Singapore and Taipei, I’ve been struck by the cities’ huge differences with China in terms of daily life. In the former two, there are rarely any surprises at all. They are great places to live, but they are also predictable (which is why expats with kids love living there). You are rarely taken aback by what you see on the street. China, as we all know, can be one surprise after another. We all have a battery of stories that prove it.

Which brings me to Tom Carter’s superb book of short stories, Unsavory Elements: Stories of Foreigners on the Loose in China, written by some of the most prominent writers in (or formerly in) China, like journalist and author Jonathan Watts, Alan Paul (author of Big in China), Deb Fallows (a linguist, author and wife of James Fallows), novelist and Fulbright Scholar Kaitlin Solimise, and an epilogue by the great Simon Winchester, author of The River at the Center of the World. And there are 23 others, most of them writers of incredible competence and backgrounds rich in China experience. Somehow, Tom Carter, the photographer behind the acclaimed photo-essay book China: Portrait of a People, has achieved the impossible, tracking down 28 of the most brilliant China hands and inducing them to write first-rate stories about some of their most exceptional experiences in China. (Peter Hessler also contributed a story, but it’s a piece he originally wrote for the New Yorker, the only story that wasn’t commissioned for the book.) Carter somehow got them all to deliver their stories, edited them and whipped them into a book that is fast paced (I read it in two or three sittings) and, like China, full of surprises.

It is impossible to write a thorough review of this book. That would take 28 posts, one for each story; trying to choose which ones to mention in this review is painful, because there is so much good in so many of them. You really need to read the whole thing. If you live in China or are curious about expat life there, this is required reading.

Like any book with 28 authors, there is going to be some unevenness. There was one story that I found disappointing, as I thought the author was puffing it up. One or two were too long, a couple were inconclusive and begged for more finality. But the remarkable thing is just how high the quality of nearly all the writing is and how remarkable the situations are, some of them downright bizarre.

Michael Levy, author of a book I should have reviewed a long time ago, Kosher Chinese, kicks the book off with the kind of moral dilemma China is known for: Michael, teaching at an English training school for rich Chinese kids, is offered a bribe to write the students’ admission letters so they can get into exclusive American boarding schools. At $1,000 an essay, it’s a tempting offer. Levy takes us into the world of teaching in China and, coming back to the bribe, leaves us hanging in a surprise ending.

One story that fascinated me for its sheer strangeness was by author Dominic Stevenson about his stay at a Shanghai prison for smuggling dope across the border. When I’ve read in the newspaper about foreigners being arrested in China and put in jail I’ve always wondered what they go through and how they survive. While this story isn’t poetic, it paints a wonderful picture of life behind bars and the special privileges foreigners enjoy there. (Despite some of the relative comforts they enjoy, it’s an experience I plan on never knowing first-hand.)

The most breathtaking story is told by Susie Gordon about her night out with a fabulously rich Chinese businessman who, with no second thought, plunks down $20,000 for a few bottles of wine in a single sitting. Describing one wild night with Mr. Zhou and his son and friends, Gordon transports us into the rarefied world of China’s super-rich, with all the luxuries, the trappings, the sins and temptations. She describes the behavior of Zhou’s son and his obscenely wealthy friends at a lavish karaoke bar operated by a friend, Yu Haiming.

The customary libation at KTV is whiskey mixed with green tea, or watery beer from tall green bottles, but Yu Haiming’s place was unsurprisingly different. He had two of the girls bring in a magnum of champagne, a little silver tray arrayed with slim white lines of powder that might have been coke but in all likelihood was ketamine, and pills nestled like candies in a brass bowl. At one point, I remember looking around at the girls, the men, the drugs and the money, and wondering how long this utopia could last: the Chinese dream in its second prodigal generation.

The entire story is a tour de force. And there’s much more: Deb Fallows’ observations on all the things you’re not allowed to do in China (the story is appropriately titled Bu Keyi), and how she and her husband came face to face with the law while shooting photos on Tiananmen Square on the 20th anniversary of the June 4 “incident.” Jonathan Watts making a visit to an environmentalist in the rain forests of Xishuangbanna. Bruce Humes’ truly harrowing depiction of his brutal mugging and subsequent experience in a Shenzhen hospital… The most poignant story is Kaitlin Solimine’s gorgeous depiction of her “second mother” when she lived in China as an exchange student, who became a lifelong friend.

Unsavory Elements is the title of editor Tom Carter’s own story, a tale of his visit with two friends to a seedy Chinese brothel in the countryside on a lane called “Teen Street.” The story has generated considerable controversy, as you can see in this review and its explosive comment thread. The story is hilarious — one of the friends is a consummate loser and Carter’s description of him caused me to laugh out loud. It took a lot of chutzpah to write a story like this, and I give Carter credit for his daring to tell a story that many expat men experience but usually choose not to tell to the world. I enjoyed reading this fast-paced piece, but I have to say that I understand why it is so controversial. The story is farce, and to shift gears and go the politically correct route and tell about the sorrows and tragedy of prostitution would have disrupted the tone. I thought, however, that Carter could have woven at least something into this story that conveyed a bit more empathy for the girls’ plight, without being preachy. It’s a hard thing to do, interjecting such a serious note into such a side-splitting narrative, but I know Carter has the skill to do this. Nevertheless the story stands out as one of the highlights of the book, another look behind the scenes of what most of us will never experience ourselves.

Do yourselves a favor and read the book. From high farce to heartbreaking poignancy, it’s all here, and you get to peer into aspects of China you may never have known about otherwise (like Dan Washburn’s trip deep into the Guizhou countryside, or Kay Bratt’s moving story of a girl in a Chinese orphanage). One can only marvel at Carter’s ability to get these stories written and then to draw them all together to form a unified whole. I’ve now read the book twice. It is a labor of love, and I think you’ll love it, too.

Communist Party cadres have filled meeting halls around China to hear a somber, secretive warning issued by senior leaders. Power could escape their grip, they have been told, unless the party eradicates seven subversive currents coursing through Chinese society.

These seven perils were enumerated in a memo, referred to as Document No. 9, that bears the unmistakable imprimatur of Xi Jinping, China’s new top leader. The first was “Western constitutional democracy”; others included promoting “universal values” of human rights, Western-inspired notions of media independence and civic participation, ardently pro-market “neo-liberalism,” and “nihilist” criticisms of the party’s traumatic past….

“Western forces hostile to China and dissidents within the country are still constantly infiltrating the ideological sphere,” says Document No. 9, the number given to it by the central party office that issued it in April….Opponents of one-party rule, it says, “have stirred up trouble about disclosing officials’ assets, using the Internet to fight corruption, media controls and other sensitive topics, to provoke discontent with the party and government.”

As the Times article says, these are not idle words. Already China is arresting more dissidents and stepping up its aggressive censorship of the Internet. Liberal Chinese intellectuals are crushed, having naively hoped Xi Jinping would usher in reforms and greater freedom of expression. I remember hoping exactly the same thing in 2003 when Hu Jintao took power, and I remember how painful it was when he almost immediately stepped up censorship and tighter controls across the board. “Mr. Xi has signaled a shift to a more conservative, traditional leftist stance with his ‘rectification’ campaign to ensure discipline and conspicuous attempts to defend the legacy of Mao Zedong.” So much for optimism.

I can’t really stress just how depressing this is. It means adherence to orthodoxy and a rejection of any open-mindedness toward even moderate reform. Read the article to see just how vitriolic (and paranoid) the language directed at constitutional government is, and how it implicitly and explicitly blames the West for all the perceived threats.

And it’s really as bad as it sounds. For example:

Staff members at the Southern Weekend newspaper there [Guangzhou] protested after a propaganda official rewrote an editorial celebrating constitutionalism — the idea that state and party power should be subject to a supreme law that prevents abuses and protects citizens’ rights.

The confrontation at the newspaper and campaign demanding that officials disclose their wealth alarmed leaders and helped galvanize them into issuing Document No. 9, said Professor Xiao, the historian. Indeed, senior central propaganda officials met to discuss the newspaper protest, among other issues, and called it a plot to subvert the party…

Everything’s a plot to subvert the party, and the West, as usual, is behind it. For anyone who’s been going easy on Xi during his honeymoon, this should serve as a brutal wake-up call. If the directive is rigorously carried out censorship and repression can only get worse.

I think the directive makes the Chinese leaders look awful — prickly, paranoid, insecure, reactionary and worse. But I also think they couldn’t care less. They have a country to hold onto, and if they perceive a threat to its grip on power it will go to any extent to tighten that grip. Read the article; it’s the most depressing thing I’ve read about China in many months.

Update: For a brilliant analysis of the directive and why it is such a bad move by the party go here.

August 19, 2013

In recent weeks we’ve seen a flurry of articles about China’s slowdown and whether the country has the ability to keep social order intact as things slow down. I am not an economist, but I’ve followed these stories with great interest. I have many friends working in China, and the last thing I want to see is a US-style financial meltdown that could wipe out opportunities for millions of Chinese.

That China is slowing down dramatically is a matter of fact, not debate. Even those who are the most optimistic about China’s future say there is no denying that in the foreseeable future we won’t see the 9 percent growth rates we’ve so gotten used to. The difference of opinion deals with how China deals with the slowdown and whether it can avoid a hard landing. Another thing I believe all parties agree with is that no matter how things end up, China will remain an economic engine of huge global influence. China won’t go away, and its importance as an economic superpower will remain largely intact.

I want to look at a link from several weeks ago that caught my eye, a piece in Forbes by the founder and CEO of the highly respected Straford think tank. If you look through their archives you’ll see they have no bias against China. The article is decidedly pessimistic about China’s economic prospects in the near future, the country being caught between the rock and the hard place of needing to keep the economy growing and needing to rein in uncontrolled borrowing.

Beijing was terrified of unemployment and the social consequences that flow from it. This was a rational fear, but one that contradicted China’s main strength, its wage advantage. Because the Chinese feared unemployment, Chinese policy, manifested in bank lending policies, stressed preventing unemployment by keeping businesses going even when they were inefficient. China also used bank lending to build massive infrastructure and commercial and residential property. Over time, this policy created huge inefficiencies in the Chinese economy. Without recessions, inefficiencies develop. Growing the economy is possible, but not growing profitability. Eventually, the economy will be dragged down by its inefficiency.

As businesses become inefficient, production costs rise. And that leads to inflation. As money is lent to keep inefficient businesses going, inflation increases even more markedly. The increase in inefficiency is compounded by the growth of the money supply prompted by aggressive lending to keep the economy going. As this persisted over many years, the inefficiencies built into the Chinese economy have become staggering.

The second thing to bear in mind is the overwhelming poverty of China, where 900 million people have an annual per capita income around the same level as Guatemala, Georgia, Indonesia or Mongolia ($3,000-$3,500 a year), while around 500 million of those have an annual per capita income around the same level as India, Nicaragua, Ghana, Uzbekistan or Nigeria ($1,500-$1,700)… Stimulating an economy where more than a billion people live in deep poverty is impossible. Economic stimulus makes sense when products can be sold to the public. But the vast majority of Chinese cannot afford the products produced in China, and therefore, stimulus will not increase consumption of those products. As important, stimulating demand so that inefficient factories can sell products is not only inflationary, it is suicidal. The task is to increase consumption, not to subsidize inefficiency.

We’ve all heard about the necessary shift in China from relying on exports to adopting a more domestic consumption-based model. But that’s not realistic. Chinese people still save more than they consume, and the market to buy all the goods China produces simply isn’t there. I highly recommend reading this entire fascinating article. It’s scary as hell.

China has recently tried to cool off its real estate buying and selling frenzy and has tried to rein in the banks, something they have been schizophrenic about, as the more they try to cool things off the greater the possibilities of greater unrest. That’s why they’ve tolerated over-production and endless construction. Some Chinese argue that all that new housing in urban areas is necessary to fulfill the government’s strategy of moving millions of Chinese from the countryside to cities to improve their lives. but so much of what is being built is middle-class and even luxury housing. Can migrant workers possibly be expected to afford living there? (No.)

There is no easy way out. The best China can do is try to forestall the inevitable for as long as they can, and try to take measures now that will soften the impact.

They continue to have a command economy; they are still communist, after all. But they cannot avoid the consequences of their economic reality, and the longer they put off the day of reckoning, the harder it will become to recover from it. They have already postponed the reckoning far longer than they should have. They would postpone it further if they could by continuing to support failing businesses with loans. They can do that for a very long time — provided they are prepared to emulate the Soviet model’s demise. The Chinese don’t want that, but what they do want is a miraculous resolution to their problem. There are no solutions that don’t involve agony, so they put off the day of reckoning and slowly decline.

Wages are rising; finally, ordinary Chinese are starting to share in the fruits of growth. But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.

And the answer, increasingly, seems to be no. The need for rebalancing has been obvious for years, but China just kept putting off the necessary changes, instead boosting the economy by keeping the currency undervalued and flooding it with cheap credit. (Since someone is going to raise this issue: no, this bears very little resemblance to the Federal Reserve’s policies here.) These measures postponed the day of reckoning, but also ensured that this day would be even harder when it finally came. And now it has arrived.

China’s slowdown, he argues, would create or at least greatly contribute to a global slump. He concludes, “No doubt many readers are feeling some intellectual whiplash. Just the other day we were afraid of the Chinese. Now we’re afraid for them.”

My view is that the “day of reckoning” will have to arrive, but this being China it might still be years away. The problem is the longer they put it off the more painful the crash will be. All economies have to go through recessions, and China’s can’t put that off forever. There has to be a time when it reaches a breaking point, where factories can’t keep producing goods no one is buying and developers can’t keep building ghost housing. Yet China never ceases to amaze me with its ability to plod forward and put off the catastrophe many economists have predicted for years, even for decades.

One last article to look at. Michael Pettis, a very well-regarded professor of economics at Beijing Daxue, argues that the slowdown China is now going through doesn’t need to be as awful as some predict, even if it goes down to 4 percent growth a year.

An orderly rebalancing, in which China’s savings rate declines steadily relative to investment, implies a contracting trade surplus that will add net demand to the world. A disorderly rebalancing might imply an explosion in the trade surplus that would weaken an already struggling global economy. Whether slowing Chinese growth is good or bad overall for the world, in other words, depends on how it affects China’s balance of trade, and this depends on how swiftly and forcefully Beijing is able to constrain credit growth and rebalance the economy.

How a Chinese slowdown affects the global economy, in other words, depends crucially on how China rebalances. The seeming determination of Premier Li Keqiang to come to grips with debt and force a rebalancing even if that brings, as it must, a sharp slowdown in economic growth bodes well for an orderly rebalancing which will benefit most of the world.

What about the social impact of slower Chinese growth – can ordinary Chinese tolerate growth rates much below 7 percent? The same process that determines the impact of slower Chinese growth on the rest of the world will also determine how it will affect ordinary Chinese.

Pettis compares China’s slowdown to what we’ve seen in Japan, and argues that maybe, like Japan, the Chinese won’t care so much about the declining GDP as long as their own family’s disposable income is enough to meet their needs. Again, I’m no economist, but it seems to me Japan had a crucially different situation because so much of its population was already very comfortable financially when the decline arrived. They had/have enough to keep on buying goods. In China, most citizens aren’t that lucky and may not be able to deal with the impact of a massive slowdown.

For every theory you may have about China’s economy you can find the data to support it. Ongoing prosperity or a financial catastrophe. I don’t pretend to know which, if any, of these scenarios plays out, but I do know that the current slowdown will have to have gut-wrenching effects at some point in the future. I hope China’s leaders can apply their “scientific” approach to economics and save China from a hard landing. But they have a daunting task, and no matter what they do, somebody’s going to be hurt, eventually.

August 2, 2013

I know, I just wrote that I’m culling my blogroll, but now I want to take a second to introduce a new blog I’ve been enjoying, My China Kanfa. Please check it out. It’s intelligent, perceptive, and it updates frequently.

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A peculiar hybrid of personal journal, dilettantish punditry, pseudo-philosophy and much more, from an Accidental Expat who has made his way from Hong Kong to Beijing to Taipei and finally back to Beijing for reasons that are still not entirely clear to him…